Recording: The panel discussion will be recorded so that if you are not able to attend the live panel discussion you can view the recording.
Pre-reading: To provide context, and to allow the panel to assume a level of background knowledge by participants when discussing some of the more challenging and interesting issues in this area, participants will be sent a summary paper outlining the legal framework which applies to this topic in Canada, The Netherlands, the UK and the US.
Recent ESG developments
Environmental (including climate change), Social and Governance (“ESG”) factors are high on the agenda for plan sponsors and for DB and DC pension plan fiduciaries/trustee boards in many jurisdictions often prompted by member questions (or other action) and government and regulator encouragement to take account of these factors when investing plan assets.
Recent developments include:
Issues for the panel to discuss
- the US Department of Labor’s release, on 30th October, 2020, of its amendment to the “Investment duties” regulation to confirm that ERISA requires plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk adjusted economic value of a particular investment or investment course of action. The new rule takes effect on 12th January, 2021 - more here.
- the extent to which non-financial ESG considerations which do not involve significant risk of financial detriment may be taken into account by UK pension plan trustee boards in light of the UK Supreme Court’s decision on 29th April, 2020 in R (Palestine Solidarity Campaign Ltd and another) v Secretary of State for Housing Communities and Local Government – more here.
- the ramifications of the Agreement on Responsible Investing which more than 70 Dutch pension funds signed in December 2018 and the extent to which its aims are constrained by Article 135(1) of the Dutch Pensions Act and Article 19 of the IORP II Directive - more here.
- whether McVeigh v Retail Employees Superannuation Pty Ltd (more here) in Australia (failure to provide information about, and to address, climate change risk) has ramifications in other jurisdictions. An announcement of settlement was issued on 2nd November, 2020 – more here.
The panel will discuss these and a number of other developments and some of the difficult issues which arise in their respective jurisdictions including the extent to which non-financial ESG factors may be taken into account in relation to:
- DB pension plan investments,
- the default investment option in DC plans, and
- the offering of “low carbon” or “green” or “ethical” or faith based (eg Catholic or Sharia compliant) investment options in DC plans.
The panel will also look at issues relating to pension plan exercising their shareholder rights to engage with boards of invested companies in relation to managing ESG risks and opportunities in relation to the running of businesses and at what point is disinvestment/non-investment becomes the option to take.
The panel will also consider whether it is possible to invest in “green” bonds which have the same maturity and key investor protection covenants but a lower interest rate than a “non-green” bond issued by the same issuer.